Disk space refers to the size of your web site. Everything that makes your web site - the text, images, scripts, databases, etc. - has to be stored on the host's web server. Each letter is one byte, and a megabyte is roughly one million bytes. HTML/XML pages are usually very small, but it is the extra images, scripts, and even databases that can take up large amounts of disk space.

Bandwidth/Data Transfer is the amount of data the server will allow your site to send in each month. Transfer is usually measured in gigabytes - billions of bytes.